Chapter 8
Non-Current Liabilities
426
AP-16B (
6
)
On January 1, 2016, Hala Ltd. issued a three-year, $150,000 note payable to finance the purchase of
factory equipment, with an interest rate of 6%. The repayment is done annually on December 31.
Required
a) How much principal will Hala Ltd. pay back at the end of 2016, 2017 and 2018, if the
blended principal plus interest method is used? Assume an equal instalment amount of
$56,117 is determined per year.
Date
A
B
C
D
Cash Payment Interest Expense Reduction of
Principal
Principal Balance
b) Prepare journal entries from January 1 to December 31, 2016. Assume the company’s year-
end is June 30.
Date
Account Titles and Explanations
Debit
Credit
